Bankruptcy

It's Official: Retirees Back the Grand Bargain

July 22, 2014, 12:15 AM

 

The city gets some good news.


A snapshot of the retirees from the Detroit Journalism Cooperative/Next Chapter Detroit. (Graphic by Shelby Reynolds)

Nathan Bomey and Matt Helms of the Detroit Free Press reported late Monday night that Detroit retirees voted to accept pension cuts and allow the Detroit Institute of Arts to spin off as an independent institution.

The media had previously reported unofficial results, saying that the retirees had accepted the cuts. But late last night, the U.S. Bankruptcy Court emailed out an affidavit with the official results.

The Freep reports that two classes of pensioners — civilians and police and fire — voted “yes” to back the grand bargain.

The Freep writese:

Police and fire pensioners voted yes by a margin of 82-18 [percent], while civilian pensioners voted yes by a margin of 73-27, according to an affidavit filed in Bankruptcy Court by the city’s California-based balloting agent. The legal threshold for a “yes” vote was approval from a majority of voters representing more than two-thirds of the pension debt.

U.S. Bankruptcy Judge Steven Rhodes will still conduct a hearing to determine if the city's bankruptcy plan is feasible.

The approval will now unleash $816 million in bailout money from the state of Michigan, foundations and the Detroit Institute of Arts to prevent the sale of city-owned art and avoid bigger pension cuts. 

Many creditors aren't enthusiastic about the plan, as The Detroit News writes: 

Syncora Guarantee Inc. and Financial Guaranty Insurance Company, the backers of a troubled pension debt deal, rejected as Class 9 the city’s plan to pay them pennies on the dollar for a $2.3 billion claim.

The investors of $175 million in limited tax general obligation bonds also rejected the city’s plan, which originally called for a reduction of up to 90 percent before a recent deal was cut to improve their return.


Read more:  Detroit Free Press


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